Britain's latest Nobel prize winner has attacked government plans to divert research funding from basic science into projects that are expected to have a quick financial pay-off.

The shake-up in science funding announced earlier this year is a "huge mistake" that jeopardises Britain's ability to make discoveries needed to drive technological progress, Venkatraman Ramakrishnan said.

Ramakrishnan, 57, was named today as a joint winner of the Nobel prize in chemistry for helping to discover how cells transform genetic code into living matter.

He shares the award – and 10m Swedish kronor (£900,000) – with Thomas Steitz at Yale University, Connecticut, and Ada Yonath, the first Israeli woman to win a Nobel prize, at the Weizmann Institute of Science, Rehovot.

Ramakrishnan, an Indian-born American, came to Britain from the states 10 years ago to work at one of the most prestigious scientific centres in the country, the Medical Research Council's Laboratory of Molecular Biology (LMB) in Cambridge.

"There is a lot of focus now on trying to get very quick pay-offs in research. It is a huge mistake. Basic science has paid off far more than any directed research," Ramakrishnan said.

"If you don't invest properly in fundamental science, then you won't have the foundations to develop the technologies and applications of tomorrow. Ten years down the line, your technology will be based on obsolete foundations."

The three scientists were awarded the prize for making detailed atomic maps of "ribosomes", the complicated biological machines lurking inside cells that translate genetic code into complex life, from bacteria to humans.

The work gave scientists an important insight into how the body makes tens of thousands of proteins that make muscle, skin and bone and let us hear, feel, taste and think.

Understanding the structure of ribosomes in bacteria has allowed scientists to develop a new generation of antibiotics.

Ramakrishnan received the call from the Royal Swedish Academy this morning after being forced to push his bicycle to work due to a flat tyre. "I was a bit grumpy, and when the lady from the Swedish Academy called, I thought it was an elaborate prank played by a friend of mine. I refused to believe her.

"When the head of the academy came on the phone, I said, 'I don't know who you are, but you certainly have a good Swedish accent.' It was only after I spoke with one or two people I knew that I believed them," he said.

"I'd be lying if I said I hadn't fantasised about the prize, but you can't do science in that hope. The ribosome, and particularly its atomic structure, is one of the major discoveries of the past decade or so, but the problem is there are many, many people who contributed to it. I am fortunate to be one of those chosen."

This year's Nobel prize is the 14th awarded to an LMB scientist. Previous winners include Francis Crick and James Watson, who elucidated the double helix structure of DNA; César Milstein and Georges Köhler, who revolutionised medicine with research on monoclonal antibodies; and Fred Sanger who won the prize twice for work on insulin and, later, genetic sequencing.

Yonath made the initial breakthrough at the end of the 1970s, when she tried to take x-rays of crystallised ribosomes – a feat many scientists considered impossible. She told a news conference by phone that the prize was "above and beyond my dreams".

Jeremy Berg, director of the US National Institute of General Medical Sciences, which funded all three scientists, said he was amazed at Yonath's persistence.

"I remember at the time being just completely stunned that she was somewhere between brave enough and crazy enough, because it was way, way, way beyond the technnology available at that point," Berg said.